World

High in Peru’s Andes, a Chinese firm paid to build a new town

The planned community of Nueva Morococha was built in a high Andean valley by the Aluminum Corporation of China to house miners and families displaced by an expanding copper mine. The town, seen here in a July 14, 2015, photo, has 1,050 homes as well as schools, clinics, a coliseum and parks. The shantytowns of Morococha Antigua are a few miles away.
The planned community of Nueva Morococha was built in a high Andean valley by the Aluminum Corporation of China to house miners and families displaced by an expanding copper mine. The town, seen here in a July 14, 2015, photo, has 1,050 homes as well as schools, clinics, a coliseum and parks. The shantytowns of Morococha Antigua are a few miles away. McClatchy

The Andean mining town of Morococha has moved.

One day a little more than two years ago, trucks arrived and professional movers entered each home to wrap furniture and haul it away. They put pets in special cages and provided hot food to residents until they could resettle.

The mining families left their decrepit mining town – a hodgepodge of shanties made from clapboards and zinc corrugated roofing, open sewers and roaming pigs – and moved five miles to a freshly constructed town called Nueva Morococha, or New Morococha.

The company behind the relocation, the Aluminum Corp. of China, or Chinalco, which obtained a concession for a huge open-pit copper mine in 2008, had little choice but to move Morococha. Over the planned 36-year life of the mine, earth movers will chew into mountainsides, and the pit will expand and undermine the town. Rather than negotiate piecemeal with individual owners, the company decided to build a new town of 1,050 homes and move Morococha in its entirety.

Today, the new town looks taken from a picture book, with tidy row houses, parks, illuminated streets and playgrounds.

“It has a church. It’s got a market. It has a soccer stadium. The company built all of this,” said Sylvia Matos, a sociologist with Social Capital Group, a consulting firm hired by Chinalco to carry off the move.

The relocation of Morococha, some 14,500 feet high in Peru’s central Andean region, underscores that the Chinese corporations that have flooded into Latin America do not always flout environmental standards and trod on workers’ legal rights as they might at home.

It’s not every day doing mining that you have the chance to do this. We’ve changed the lives of a lot of people.

Ezio Buselli Canepa, vice president of environmental and corporate affairs for Minera Chinalco Peru S.A.

“The Chinese have learned from errors they’ve done in the past,” said Ezio Buselli Canepa, vice president of environmental and corporate affairs for Minera Chinalco Peru S.A., the subsidiary of the huge Chinese corporation, the world’s second biggest aluminum producer.

A strong regulatory environment is critical to dealing with a surge of Chinese regional investment, experts here say, a lesson that could serve other Latin governments that grant concessions to Chinese mega-projects, such as Nicaragua, where a Chinese firm has won a $50 billion bid to build a transoceanic canal.

For centuries, Peru has been a mining powerhouse, and today copper, iron ore, gold and other minerals account for 60 percent of its total exports.

Today, companies from 30 countries have investments in the mining sector, and most of them send their output to China, where new cities need steel rebar, copper wiring and zinc plating. Chinese appetite for ore transforms Peru.

When Chinalco obtained the concession to exploit the Toromocho copper deposit near here, one of the nation’s largest, it agreed to build a new town to house the 5,000 residents of Morococha, a mining camp founded more than a century ago but with a transient feel.

The old Morococha was a collection of makeshift shanties with corrugated tin roofs held down by rocks. Virtually no public services existed. Miners and their families lived in crowded, unsanitary abodes. Sewage ran in gutters. Children played in what appeared to be toxic mine waste. Year-round freezing temperatures only added to hardship.

“Old Morococha was really messy,” said Felipe Chambi Mamani, a former miner from the border with Bolivia who arrived three decades ago. “We lived in one room, all six of us. We’d walk into the hills to get water, which was often polluted. There were public latrines. You’d be disgusted by them.”

Social ills were rampant. But because the low mining salaries were stable, migrants kept arriving from elsewhere looking for jobs. The vast majority rented shacks from a few property owners.

Company agents held a series of open meetings to ask residents where it should relocate the town. Not all residents were employees of Chinalco. Some worked for other mining companies in the area.

Townspeople had reason to doubt Chinalco’s promises, given a troubling recent history of forced evictions in mainland China, where township and city authorities routinely relocate populations, sometimes using force. Those who fight the evictions are sometimes sent to “education through labor” camps. Seeking legal redress often only brings further harassment.

But Chinalco representatives pressed their case and received a rough consensus after the town meetings. The company set a deadline in 2009 for anyone who wanted to apply for a free home in New Morococha, which would be set across a mountain pass from the original settlement.

It has a church. It’s got a market. It has a soccer stadium. The company built all of this.

Sylvia Matos, a sociologist with Social Capital Group, a consulting firm hired by Chinalco

“We said that everyone who’d been in Morococha for at least one year would receive a housing unit,” Matos said.

The relocation was largely complete by early 2013, but some residents remain disgruntled. The houses were free, but they see other problems.

“We don’t have our deeds yet,” said Maximo Corsino Guadalupe, a heavy equipment operator who earns more than the equivalent of $1,000 a month at the Toromocho mine. “Without the deeds, we can’t sell.”

China's investment in Latin America

As Chinese trade with Latin America has grown, the country has begun to invest in a variety of projects across Central and South America.

Tap on the map points to learn more.

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Argentina

China has pledged $2.5 billion for Argentine railways and $5 billion for two hydroelectric dams, as well as technology for two nuclear plants. For its part, Argentina allowed China to construct a satellite monitoring station in Patagonia.

The Bahamas

A Chinese bank and construction firm salvaged Baha Mar, the largest resort and casino complex in the Caribbean, with a $2.4 billion loan and some 4,000 Chinese laborers. The four-hotel complex has yet to open amid lawsuits.

Brazil

In a flurry of activity, Chinese lenders rescued Brazil’s troubled state-run oil producer, Petroleo Brasileiro SA, with a $10 billion loan in May, and in the same month China’s fifth-largest bank, Bank of Communications, bought an 80 percent stake in Brazilian lender Banco BBM.

Brazil-to-Peru Rail

China has pledged $10 billion to build a transcontinental railway from Brazil to Peru through some of South America's most environmentally sensitive areas. The railway would transport Brazilian iron ore and soybeans to China at lower cost.

Ecuador

Among China’s projects in Ecuador is its largest hydropower plant, the $2 billion Coca Codo Sinclair project which will satisfy about one-third of the country’s electricity demand when complete.

Jamaica

China Harbor Engineering Company employs some 2,000 persons in Jamaica, and is currently executing highway projects valued at some $1.5 billion.

Nicaragua

A Chinese tycoon won the 2013 concession to build a 170-mile canal from Nicaragua’s Atlantic to Pacific coast. Serious construction on the $50-billion project has been delayed, and skeptics say it will never be built.

Venezuela

Since 2007, China has provided some $56 billion in loans to Venezuela in so-called oil-for-loan deals that ensure Beijing a steady supply of energy. Venezuela exports about 600,000 barrels of oil to China a day, nearly half of which go towards repaying its loans.

Company officials blame government bureaucracy for the holdup on deeds.

Like many commodity prices, copper has tumbled recently on international markets, and demand for Peru’s minerals has fallen. Chinalco currently employs 2,000 people and another 1,000 contractors. It’s not clear if the payroll will grow.

On a recent day, Zara Casachagua, 56, sold candies, baked goods and groceries out of her one-room store in Old Morococha. She and her family are partial holdouts; there are about 150 families who’ve refused to relocate. She’s accepted a free home in the new town but has refused to sell her store. She still does business among fellow holdouts.

“Maybe it’s pretty down there but how pretty can it be if there’s no business?” she asked. “There’s no one to sell to. What are we to do?”

Indeed, New Morococha does seem a little lifeless. Company shifts allow some miners to work more consecutive days, giving them more days off together. Some have moved their families away and travel to distant homes on their down time, leaving their Morococha houses vacant.

Executives at Chinalco shrug at the complaints, saying they are proud of the new community, which had a price tag far higher than the budgeted $50 million.

“It’s not every day doing mining that you have the chance to do this. We’ve changed the lives of a lot of people,” Buselli said.

China's train through Brazil

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China is looking at designing and financing the first transcontinental South American railroad. As Brazil has become a stronger trading partner with China, a modern rail corridor would help ease the Atlantic nation's ability to export to its Pacific trading partner.
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A railroad would be built from Açu Port on the east coast of Brazil to Peru's Pacific Coast, increasing Brazil's access to shipping to Pacific Rim countries

Top importers of Brazilian goods, 2000-2014

China has gone from not being among the top importers of Brazilian goods in 2000 to being Brazil's top buyer since 2009.

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Soy, one of Brazil's largest exports to China, currently must be shipped from the center of the continent to the eastern shore where it can be exported. A new rail line would allow transporting the crops directly to the Pacific Ocean.
More than 1 million tons 50,000 to 1 million tons 10,000 to 50,000 tons 5,000 to 10,000 tons 1,000 to 5,000 tons
The Inter-oceanic Highway is the only road connecting Brazil to Peru
The proposed train route would run from eastern Brazil, through much of the country where soy is produced to the western coast of Peru, from where it could be shipped to Asia.
 
Source: Instituto Brasileiro de Geografia e Estatística, UN Comtrade Database, McClatchy Washington Bureau

This is one of several stories on China’s influence in Latin America and the Caribbean funded in part by a grant from the Pulitzer Center on Crisis Reporting.

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